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OSLO, NORWAY—For a country where oil generates a fifth of economic output, Norway is surprisingly green.

Ever since it struck oil under the North Sea in the late 1960s, Norway has tried to find a balance between profiting from oil and natural gas and protecting the environment in a country as rich in beauty as it is in fossil fuels.

Norway also wins over Canada when it comes to meeting its international commitments to fight climate change.

Norway is one of only five countries making sufficient progress toward their target for cuts in greenhouse gas emissions under the 1997 Kyoto Protocol, the only legally binding international agreement to combat climate change.

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Canada is way down on the inadequate list, just above China, the world’s biggest producer of the emissions blamed for global warming, according to the experts at Climate Action Tracker.

For 23 years, Norway has had a national carbon tax, which many economists and climate experts argue is the fairest incentive to persuade business and consumers to reduce their carbon footprint.

Last year, Norway got even more aggressive against climate change and doubled the carbon tax on offshore oil production, further squeezing energy companies that already pay one of the world’s highest tax rates.

The government also created a $6-billion fund to back renewable energy and other projects to help slow global warming, while reducing energy waste. That’s on top of more than $2 billion in aid pledged to fight deforestation in Brazil, Indonesia and Guyana.

Canada slides

In Canada, Prime Minister Stephen Harper continues to take a hard line against a national carbon tax, insisting it’s a job killer even though expert studies have concluded British Columbia’s carbon tax has reduced fuel use without harming the economy.

Harper officially withdrew Canada from the Kyoto agreement in 2011, arguing it’s too costly and imbalanced because the U.S. hasn’t signed on and targets for reducing greenhouse gases don’t apply to China.

Norwegians are still committed to the deal and they’re spending billions of dollars trying to be true to their promise.

To Norwegians, those resources are the people’s property, a precious national treasure that shouldn’t be squandered.

The cardinal virtue was practically carved in stone in 1971, two years after Norway discovered the first of its vast oilfields under the North Sea, when the country’s parliament passed what are now known as the Ten Oil Commandments.

The first enshrined the guiding principle that: “There should be national governance and control of all petroleum operations,” while the Eighth Commandment declared: “A state oil company should be established.”

Norway’s Statoil remains a global giant in oil and natural gas today.

While it’s a great source of pride and considerable profit for Norwegians, many see Statoil as a national embarrassment because it’s working in Alberta’s oilsands, now a global symbol for dirty energy. But more on that later.

“When you see something like flaring (burning off natural gas produced from an oil well because it’s cheaper than capturing it), Norwegians consider that not only environmental polluting, but also a total waste of resources that shouldn’t happen,” Whittingham says.

Pembina campaigns for Canadians “to think and act like owners” when it comes to energy resources, but “we still don’t see regulations that actually encourage that,” Whittingham adds.

“Too often, I think, as Canadians we’re divorced from the resources instead of thinking that they’re ours.”

To Norwegians, the small group of civil servants and politicians who wrote the basic principles for exploiting riches, without sacrificing social justice and the environment, are almost mythically wise patriots.

Their decisions opened the way to a sovereign wealth fund that has amassed more than $885 billion and contributes around 10 per cent of the national budget, while still growing each year.

But some Norwegians want to see even higher standards for environmental oil.

“What’s happened during the past 10 or 15 years is that the whole energy sector, and our knowledge about how energy affects our climate, have changed a lot,” says Ingrid Lomelde, who heads the World Wildlife Fund’s climate and energy team in Norway.

“And in this period, we haven’t had politicians who have been equally foresighted in taking care of Norway’s reputation, and also in making sure that we actually contribute to changing our energy systems the way we need to.”

Norway’s environmental groups are lobbying hard to get the people’s money out of dirty energy, including industries that mine or burn coal, and Alberta’s oilsands, the fastest-growing source of greenhouse gases in Canada.

On the brighter side, Statoil points out, “project well-pads resemble conventional oil drilling projects, resulting in dramatically less surface disturbance than open-pit mining. They also do not require the use of (toxic) tailings ponds.”

Norway’s sovereign wealth fund, officially called the Pension Fund Global, has indirect stakes in the oilsands through shares in companies such as Shell that are major players in the oilsands.

“It’s a huge embarrassment for Norway,” Lomelde says. “And there are several reasons for that. Maybe the most embarrassing thing is that Statoil likes to use its investments in tarsands as a further way of building its reputation.

“So they’re saying that, ‘We’re probably the ones doing this kind (of) exploitation in the best way, in the most environmentally friendly way. So that’s why we need to do it instead of other companies.’ Which is just hugely hypocritical.”

Several years ago, WWF joined with Greenpeace to buy a single share in Statoil, which it uses each spring to ask the company’s general meeting for a vote to pull out of the oilsands.

“It’s always the state representative that votes us down because the state has the majority of the stocks,” Lomelde says.

Radical change?

Public unease about Norwegian investments in foreign fossil fuels with the worst reputations is forcing a policy shift. The question is how radical that will be.

Norway’s government has promised to require the country’s sovereign wealth fund, the world’s largest, to invest in renewable energy. But it’s studying the issue to decide appropriate criteria to guide the fund managers’ decisions.

Norwegian activists, and even some investment firms, are pressing politicians to give the global fund a mandate to invest directly in renewable energy infrastructure, and not simply to buy shares in well-established, publicly traded companies.

“Since we have all this capital, we could at least send some signals to the market that might spur other investors to also change their criteria,” Lomelde says. “And then you would really change the energy markets.”

But that would also upend the conservative investment rules that have helped make the fund so successful, which worries a lot of Norwegians wary of gambling the security of their welfare state on green startups.

“Investing in more fossil fuels is undermining the physical reason for our existence,” Lomelde argues. “So we need to secure our environment in order to also secure our welfare state.”

A majority in Norway’s parliament, the Storting, along with activist groups, including the WWF, want the fund to lead the way against coal by withdrawing from all of its coal-related investments, Lomelde says. Those holdings are estimated at $9.8 billion.

“For Norway, the situation is special because we earn so much of our money from fossil fuel investments,” she adds. “And then we reinvest that in new fossil fuel investments in other countries.

“So the risk for us, for our economy, is really quite huge — if you think that politicians around the world are going to start taking climate change seriously. The coal lobby came flying in from Australia to lobby our parliamentarians directly because what our sovereign wealth fund does has a huge effect.”

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